William Cabantog and David van Iersel were paraded at a police news conference in handcuffs and leg shackles. A police statement said they were arrested on Friday at the Lost City Club in the island's trendy Canggu neighborhood with 1.12 grams of cocaine.
It said Cabantog, 36, and van Iersel, 38, each face prison sentences ranging from four to 12 years if they are convicted.
According to police, Cabantog, who was described as a hospitality consultant, was well known for circulating cocaine in Canggu. The Lost City Club was managed by van Iersel.
No other information was immediately available on any court appearance or defense for the two men.
Indonesia has extremely strict drug laws, and convicted smugglers are sometimes executed.
More than 150 people are currently on death row, mostly for drug crimes. About one-third of them are foreigners.
Relations between Indonesia and Australia were strained in 2015 when two Australians, Andrew Chan and Myuran Sukumaran, who were the ringleaders of a drug smuggling ring dubbed the "Bali Nine" by Australian media, were executed by firing squad.
A Frenchman was sentenced to death on Lombok, an island next to Bali, in May for smuggling smuggling 3 kilograms (6.6 pounds) of ecstasy.